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After years of dealing with a strong local currency, Chilean wine exporters began celebrating the peso’s decline versus the U.S. dollar, but the cheering subsided when Chile’s new administration in March sent a bill to Congress that includes raising taxes on companies and alcoholic beverages.

For the past several years, Chilean wine producers have been complaining about the strong local currency, as most of their revenue is denominated in dollars while their costs are in pesos. With the dollar mostly trading at less than 500 pesos between August 2010 and October 2013, wine companies struggled to survive and along with other exporters asked the Chilean central bank to intervene in the currency market. As a predominantly export-based economy, Chilean exporters generally benefit from a weaker peso.

“To make the wine industry profitable, one dollar should be equivalent to 500 pesos,” said wine company Viña Concha y Toro Chief Executive Eduardo Guilisasti to The Wall Street Journal in August 2012, when the dollar was trading at around 484 pesos.

In the last quarter of 2013, the peso began to weaken versus the dollar, in line with other Latin American currencies after the U.S. Federal Reserve said it would reduce its economic stimulus program. The Fed’s program had flooded global markets with greenbacks. Today, one dollar trades at about 550 pesos.

The joy of a weaker peso didn’t last long for wine producers. The new tax reform, which is expected to be approved in the second half of the year, will raise taxes on wine by 60%, according to industry group Wines of Chile. Wine companies currently pay a 15% tax, which is expected to increase to about 24%. Beer producers, meanwhile, would pay about 20% in alcoholic beverage taxes.

The reform will also raise corporate taxes to 25% from the current 20% and will eliminate a tax break for companies that reinvest their profits. The bill, widely criticized by the local business community mainly because of the end of the tax break, is at the core of President Michelle Bachelet’s government program. The reform aims to increase tax revenue by about $ 8.2 billion, or 3% of gross domestic product. A member of the Socialist Party, Bachelet didn’t raise taxes during her first administration --between 2006 and 2010-- as her predecessors and successor did.

Wines of Chile estimates that the tax increase to alcoholic beverages will especially hurt smaller producers and consumers of cheaper wines. The group also said that the bill will trigger lower employment in the wine region --center-south of Santiago-- and will dampen Chilean competitiveness abroad. After all, wine is one of Chile’s flagship industries and other countries with a more developed wine industry, such as France, have nearly zero taxes on its bottles of red or white. “As Socialist as France is, nobody there touches wine or fromage,” a French wine producer living in Santiago recently told me.